Commerce slaps foreign shrimpers with taxes

Gulf Coast shrimpers are now closer to solving a jumbo problem — foreign competition that has almost entirely replaced their product in restaurants and grocery stores.

The U.S. Commerce Department on Tuesday slapped new duties on shrimp imported from five countries – China, Ecuador, India, Malaysia and Vietnam – after finding that their governments are propping up businesses and unfairly undercutting domestic prices. All told, the duties would have amounted last year to more than $150 million on nearly $1.7 billion in imports, or 40 percent of the U.S. shrimp market.

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As a result, grocery store chains predict the most popular seafood in the United States might cost more.

The countervailing duties are not yet final: They also must be independently approved by the U.S. International Trade Commission, which is scheduled to vote in late September.

There was a major silver lining for the large seafood companies that import much of their product, however. The Commerce Department decided not to impose new duties on shrimp from Thailand and India, the first and third largest importers of shrimp into the U.S. Together these two countries shipped another $1.7 billion in shrimp to the United States last year.

Still, news of the duties was cause for celebration among the Gulf Coast shrimp harvesters and producers who have been struggling to rebound from Hurricane Katrina in 2005 and the massive oil spill five years later.

“We don’t mind competing with any business in the world. However, competing with a foreign government is out of the realm of possibility,” said David Veal, executive director of the Coalition of Gulf Shrimp Industries in Biloxi, Miss. — the group that petitioned Commerce in December for the tariffs.

Domestic shrimpers – the real-world operators of companies like the famous “Bubba Gump Shrimp Co.” – have complained for years about large seafood companies gobbling up the cheaper foreign product that now dominates the U.S. market.

U.S. shrimpers, in their complaint, say they have tracked foreign governments giving their own producers as much as $13.5 billion in subsidies since 2009. In one instance, the shrimpers say they observed the Chinese government giving their producers low-interest loans. In another, Vietnam gave its producers land at a cut rate.

Each instance further enabled the foreign competition to maintain lower prices than domestic producers.

“These products are highly interchangeable and the most often-asked question by a buyer is, ‘Can you meet this price that I can get from importers?’” said Veal, whose group represents shrimp producers in Alabama, Florida, Georgia, Louisiana, Mississippi, South Carolina and Texas. As a result, domestic shrimpers’ profit margins were driven to near zero last year, according to the trade association executive.

Regardless, large seafood companies, which largely have replaced domestic shrimp with Asian imports because they are a cheaper and more consistent product, aren’t likely to applaud Commerce’s action.

“This is an attempt at protectionism to defend one’s industry,” said Travis Larkin, the president of Raleigh, N.C.-based importer Seafood Exchange, in advance of the decision.

“The market here needs that imported product just to fulfill the need,” added Larkin, who formerly handled shrimp purchases for Darden Restaurants Inc., owner of the Red Lobster, Olive Garden and Bahama Breeze chains. “Even if there were not a pound of imported shrimp, the domestic industry just doesn’t have the capacity to fill the market need.”